Japan has been a key element in the suc cessful international strategy of fast- growing MIPS Computer Systems Inc over the last few years. Although not all apparently believe that the MIPS strategy is appropriate for an American company in these days of semiconductor trade friction, the tightly focussed MIPS can point to the strength of its relationships with Japan’s top companies – and the revenue from Japan – as proof of its success. Recently Anita Byrnes had the opportunity to interview the country sales manager for Japan and a director of MIPS Computer Systems Japan KK, Tom Laux, who is the bicultural Californian who started the company in Japan.
When Tom Laux became country sales manager for Japan – he is now also a director of MIPS Computer Systems Japan KK – he ran it from his house for a few months. That was a little over two short years ago, but it is now a company with 30 staff in Japan, contributing a considerable slice of the Sunnyvale, California parent, MIPS Computer Systems Inc’s international revenue – and 50% of MIPS total revenue of $102m last financial year came from outside the US. In 1988 MIPS was dealing through a distributor in Japan, Marubeni Electronics, and Japan was contributing around $1m of its $12m total turnover, when Bob Miller, now chief executive, joined MIPS and took the bold step of sharply refocussing the company as a technology company with a very strong international perspective. It was at that point that MIPS devised its vision of itself as a two-sided company with a technology and a systems arm, and set about acquiring its Semiconductor Partners, one in Europe and one in Japan, as well as the three companies in the US. A wholly owned subsidiary was set up in Japan – a bold step considering the cost – MIPS Computer Systems KK’s paid up capital is 75 million yen $550,000 in today’s money, and Laux went about recruiting staff, starting with a customer support manager.
NEC came through
The managing director of the company is Mr Yasuhiro Nakagawa. NEC Corp was the company that came through with the quickest decision to become a MIPS Semiconductor Partner – NEC in 1988 had just released its complex instruction set microprocessor-based 4800EWS workstation, a late entry to the workstations market, and apparently recognised that it needed an edge if it was to gain market share. The head of the Semiconductor Division Dr Sasaki, a man of vision, was the driving force behind the decision. NEC is now one of the five companies licensed to receive mask-level data and authorised and obliged to make pin-compatible MIPS R2000 and R3000 CMOS chips. NEC, along with Sony Corp, is also a Semiconductor Partner for the R6000 ECL chip. A number of other Japanese major manufacturers have figured in MIPS success.
Toshiba Corp is an Architecture Licensee – meaning that it is licensed to receive the schematics and a certain amount of general information about the MIPS RISC chips, giving it in effect the right to reverse engineer the chip, but more importantly to use MIPS Computer’s optimised RISCompilers. –
Design wins have included Sony (RISC NEWS workstation); the workstation division of NEC (EWS 4800 Models 220 and 260); Sumitomo Electric Industry Co, a subsidiary of Sumitomo Corp (its SP-200 workstation and a new R-3000-based machine); Brother Industries Inc; and a number of other major companies, which because of the 18 months to two years design time, have yet to be announced. On the systems side Kubota Ltd, which has invested $20m for a 17% stake in MIPS, manufactures MIPS systems at its plant in Yamanashi, through its subsidiary Kubota Computer Co, and according to Laux, has taken complete responsibility for manufacturing, as well as making OEM sales. The systems business and OEM sales of RISC systems make up 50% of MIPS Computer’s revenue in Japan. For example Sony Corp recently became a MIPS Valued Partner and committed to an OEM agreement on the 55MIPS 6280 high-end RISC machine, seeing its software compatibility with the RISC R3000-based NEWS as an opportunity to create server networ
ks; and a number of other manufacturers are expected see the R6000 in similar light.
Critical in Japan
Key to MIPS’ successful leveraging of manufacturers many times its size in Japan has been its positioning as a technology company willing to give a measure of control to its licensees. Tom Laux sees MIPS as the central research laboratory for its customers, with the customers looking after manufacturing, product quality, delivery, pre-and post-sales support – critical in Japan – and sales. Most European and American companies do not recognise that as a general rule, Japanese companies like to add value to a foreign product, understand it, make it their own; only then will they make the commitment to have their name on the product. This contrasts with the free and easy distributorship arrangements more common in the West. MIPS has also been distinguished by its flexible approach to the market it sells the building blocks for systems at any level – from chips to boards to systems and software. One could add that, in cultural terms, too, having a bilingual person such as Laux committed to Japan, with an understanding both of the industry and the environment into which the company is moving, has been invaluable in making the right decisions over the past few years. Looking to the future, Laux sees that the relative balance of MIPS revenues will change from a 50-50 ratio to a 25% technology-75% systems ratio by 1994; that RISC use will expand into new fields – controllers for laser printers is one area where they are just beginning to be used – but in the future he expects to see a range of other areas not necessarily directly computer-based; and that hybrid RISC applications and real-time Unix and embedded RISC will become more important through into the late 1990s.
